We consider random wealth of the multiplicative form xy, where x and y are statistically independent random variables. We assume that x is endogenous to the economic agent, but that y is an exogenous and uninsurable background risk. Our main focus is on how the randomness of y affects...

Using a laboratory experiment, we investigate the validity of stated risks elicited via the Exchangeability Method (EM) by defining a valuation method based on de Finetti’s notion of coherence. The reliability of risk estimates elicited through the EM has been theoretically questioned because...

Mass adult male circumcision campaigns for HIV prevention are underway across much of Sub-Saharan Africa. However, concern remains about risk compensation associated with the reduction in the probability of HIV transmission per risky act. This paper examines the be- havioral response to male...

Mass adult male circumcision campaigns for HIV prevention are underway across much of Sub-Saharan Africa. However, concern remains about risk compensation associated with the reduction in the probability of HIV transmission per risky act. This paper examines the be- havioral response to male...

This paper sets out to show that a risk-averse sport fanatic could hedge his happiness by betting on the opposition. The literature surrounding happiness, risk- and loss aversion is explored and a model is developed to explain the happiness a fan derives from a match. It is shown that...

This research inspects the general implications of considering duration of confinement as a deduction to the convicted consumer-worker time endowment. Even if analytically simple, the model is able to shed some light on the expected wage profile of criminals, and the pattern of their...

The quintessence of recent natural science studies is that the 2°C target can only be achieved with massive emission reductions in the next few years. The central twist of this paper is the addition of this limited time to act into a non-perpetual real options framework analysing optimal...

We study multivariate prevention decisions by disentangling early and late prevention. We show how the modularity of prevention and several measures of prevention efficiency interact with the agent’s risk attitude. We derive comparative statics with respect to impatience, loss severity, and...

We inject aggregate uncertainty — risk and ambiguity — into an otherwise standard business cycle model and describe its consequences. We find that increases in uncertainty generally reduce consumption, but they do not account, in this model, for either the magnitude or the persistence of the...

We study an individual who faces a dynamic decision problem in which the process of information arrival is unobserved by the analyst. We derive two utility representations of preferences over menus of acts that capture the individual’s uncertainty about his future beliefs. The most general...